Given the century of success notched up by Shell, and the loyalty so many believe it is appropriate to show, there will be a temptation to try to look beyond the unpleasantness now engulfing the company. Private investors, along with many institutional fund managers, will be hoping that the error made with regard to the classification of oil reserves is no more than a temporary blip — a little local difficulty that can be quickly forgotten about. The movement of the Shell share price over the past three months certainly suggests that investors are reacting to the scandalous news with equanimity. Yes, Shell shares lost 13 per cent of their value in the four weeks after the first surprise — delivered on January 9 — but since February 6, they have reclaimed much of the lost ground. Since early February, Shell has outperformed the FTSE all-share index by 8 per cent.

The share price bouyancy might be explained by speculation that Shell’s current difficulties will bring a takeover bidder out of the woodwork. Shell’s 10 per cent recovery since early March compares with a 15 per cent spurt at BP. Shell’s stock was also helped because there is growing confidence that oil will maintain its current relatively high price. Many think that oil will sustain a price closer to $30 a barrel, where the average for the past two decades is a little more than $20.

The relative recent strength in the price of Shell shares, however, does little more than present shareholders with an opportunity to get out at a respectable level.

It would be wrong to get too carried away with the depth of the problems. Shell is in a lot of trouble, but the oil and gas assets it owns and the cashflows generated mean that it is a long way from collapse. But to be a worthwhile equity investment, Shell has to do more than sit on its assets. It has to show the ability to grow. The key figure emerging from the recent shenanigans is that Shell now expects to replace only 60 per cent of the oil it produces. In suggesting that it is finding only six new barrels of oil for every ten it sells, Shell is admitting that it is shrinking.

It may be that having over-egged the reserves pudding in the past few years, the company is now under-egging the pudding. Timing issues related to the development and classification of new discoveries may also make the six-out-of-ten figure look unduly pessimistic. But any way you observe the reserves position, Shell will have to run fast, uphill, even to stand still. For the present, it is going backwards.

Meanwhile, Shell’s efforts to rectify the situation will be stymied because managers throughout the company will be preoccupied. All have to come to terms with the body blows meted out to their self esteem. Some will be tied up dealing with the direct fallout from the scandal — including legal actions.

The double-headed Anglo-Dutch corporate structure, which leaves UK shareholders in a minority, also raises the suspicion that the re-formation required to improve Shell’s oil-finding strength will be slow in coming, if it comes at all.

Shareholders should vote with their feet and sell at least half their Shell stock. You can no longer be sure of this company.